Most traders and markets use a period of 14 although 9 periods and 20 period values are used to make the values more or less sensitive, respectively.

The defaultis a period of 14.

The “Show Zones” box allows the user to draw overbought and oversold lines on the plot. They default to -20 for overbought and -80 for oversold but can be changed by the user.
You can also select colour for the plot (and the two zones by selecting the boxes next to each to bring up a colour palette.

Theory

%R is the measurement of the placement of a current price within a recent trading range. The theory is that as prices rise, daily (or hourly, minute, etc.) closes tend to occur closer to the high end of their recent range. When prices trend, higher or are flat and daily closes begin to sag within the range, it signals internal market weakness.

Interpretation

Williams %R creates the same plot as fast stochastics and only the scale is different. However, because it is not smoothed the plot will tend to show many crossovers and therefore could show false signals to the inexperienced user of this technique.

Values above -20 or below -80 are potential market signals. Divergences between %R and the price trend, both within the overbought and oversold ranges, provide evidence of pending reversals in the market.

QBE rallied in July 2014 but 14-day %R started to fade, forming a bearish divergence. It was a good sign for traders to take profits ahead of the fall.

In September 2014, %R dropped to the -80-level but not below to suggest that the price decline was just a correction and the dip could be bought.

Finally, in November 2014, a bullish divergence appeared as %R made a higher low even as prices rose.

Math

Calculates where price is within a recent range.

Fast calculation (%K) uses raw value with a simple moving average

Slow (smoothed) version (%D) uses the simple average with another simple average of the first

%R = (Highest High – Current) / (Highest High – Lowest Low)

The result is multiplied by -100 and is plotted on a scale of -100 to zero